Parker E. Thoeni – Labor & Employment Reporthttps://www.laboremploymentreport.com
Management’s Workplace Blog – Information and Insights for EmployersMon, 18 Mar 2019 15:36:44 +0000en-UShourly1https://wordpress.org/?v=4.9.10DOL Proposes New Overtime Rule, Increasing Required Salary Level for Exempt Employeeshttps://www.laboremploymentreport.com/2019/03/08/dol-proposes-new-overtime-rule-increasing-required-salary-level-for-exempt-employees/
https://www.laboremploymentreport.com/2019/03/08/dol-proposes-new-overtime-rule-increasing-required-salary-level-for-exempt-employees/#respondFri, 08 Mar 2019 15:17:08 +0000https://www.laboremploymentreport.com/?p=3223In the latest development in the long saga involving the overtime rule, the Department of Labor has now issued its long-awaited proposed revision to the regulations governing which employees are exempt from the requirement to pay overtime for all hours worked over 40 in a workweek.

The Current Rule: The current overtime rule, which took effect in 2004, sets forth three tests, all of which must be met in order for a white-collar employee to be deemed exempt: (1) the employee must be paid on a salary basis; (2) the employee’s salary must be at least $455 per week (equaling $23,660 per year); and (3) a duties test specific to the exemption in question – executive, administrative or professional (EAP). There is also a highly-compensated employee (HCE) exemption, under which an employee must make at least $100,000 per year (in addition to being paid at least the standard salary level per week on a salary or fee basis) and perform at least one exempt duty.

The First Attempt to Revise the Rule: As employers may remember, the DOL issued a revision to the overtime rule in 2016. The salary levels for the EAP and HCE exemptions were vastly increased – to $47,476 per year ($913 per week) and $134,004, respectively. The rule also contained an automatic increase to the salary levels every three years. There was immediate outcry from the business community, and litigation ensued. Only days before the rule was to take effect, it was enjoined by a federal court in Texas, which found that the new salary level exceeded the DOL’s authority. Under the Trump administration, the DOL then indicated that it would issue new regulations, for which the business community has been waiting.

The New Proposed Rule: The proposed rule rescinds the 2016 rule and contains changes to the salary levels for the EAP and highly compensated exemptions, so that, according to the DOL, they maintain their usefulness in “screening out the obviously nonexempt employees.”

The DOL proposes to set the EAP salary level at $679 per week($35,308 per year). In setting this number, the DOL used the same methodology that was used to set the salary level in 2004 – the 20th percentile of earnings for full-time salaried workers in the lowest income U.S. Census region (currently the South) and in the retail sector, projected forward to January 2020, when the DOL expects the final rule to take effect. By using the same methodology to calculate the salary levels as it did in 2004 – which was never challenged – the DOL is admittedly hoping to avoid further litigation over its attempts to increase the salary level.

In addition, the DOL proposes to set the required annual salary for the HCE exemption at $147,414. As under the 2004 rule, this number is based on the 90th percentile of full-time salaried workers nation-wide (rather than the regional data used for the EAP exemptions).

As it had previously done in the 2016 regulations and for the stated purpose “to align the regulations better with modern pay practices,” the DOL has included a provision allowing employers to count nondiscretionary bonuses, incentives and commissions for up to 10% of the EAPsalary threshold. Examples of such payments cited by the DOL include nondiscretionary incentive bonuses tied to productivity and profitability. Under the proposed rule, these payments must be made on an annual (using any 52-week period or, by default, a calendar year) or more frequent basis. In addition, if an employee’s salary plus these additional payments do not reach $35,308 for the year, the employer may make a “catch-up” payment no later than the next pay period after the end of the year. This catch-up payment would only count towards the prior year’s salary, and may not be counted in the year it was paid. (Of note, the HCE exemption already permits employers to count commissions, nondiscretionary bonuses and other nondiscretionary compensation towards the total required salary above the standard weekly salary level, and permits a catch-up payment in the month after the end of the year).

Of particular note, the DOL is not including automatic increases to these salary levels as part of this proposed rule. Rather, it states that it will propose updated salary levels every four years, using the regulatory notice and comment process. Those updates will utilize the same methodology as the 2004 and now-proposed rule to set the salary levels described above.

The DOL projects that, without intervening action by their employers, approximately 1.1 million individuals will become eligible for overtime under the revised EAP salary level, while approximately 200,000 individuals will do so under the revised HCE salary level. (This is in contrast to the 2016 rule, which would have affected 4.2 million workers.)

Interestingly, in its extended analysis of the anticipated impact of this proposed rule, the DOL acknowledges that there may be some negative consequences. For example, employers may incur ongoing managerial costs related to developing work schedules and monitoring hours worked to minimize or avoid overtime. Newly non-exempt workers may lose the flexibility in scheduling that they enjoyed as exempt employees. In addition, they may lose certain benefits offered only to salaried exempt employees. The DOL also acknowledges that the increased labor costs could result in higher prices for consumers and/or reduced profits for employers. And, of course, employers may seek to reduce costs by reducing workers’ hours in order to avoid overtime – thereby disadvantaging lower-wage workers – while exempt workers may see an increase in workload to make up for those hours.

What Happens Now: There will be a 60-day comment period following publication of the Notice of Proposed Rulemaking in the Federal Register. You may submit comments electronically at https://www.regulations.gov/. Once the 60-day period has closed, the DOL will take some time to consider the comments and then subsequently issue the final rule. The DOL has also posted a Fact Sheet and Frequently Asked Questions on the proposed rule to its Overtime Rule webpage.

Notably, many employers had already come into compliance with the last version of the revised overtime rule, so the revised rule should have no impact on them. Employers that were less proactive at that time may await the issuance of the final rule before taking any steps. There will be some period of time after the final rule is issued before it takes effect, which will allow for those employers to plan for compliance.

]]>https://www.laboremploymentreport.com/2019/03/08/dol-proposes-new-overtime-rule-increasing-required-salary-level-for-exempt-employees/feed/0We Sued the DOL, and the DOL Blinkedhttps://www.laboremploymentreport.com/2018/07/18/we-sued-the-dol-and-the-dol-blinked/
https://www.laboremploymentreport.com/2018/07/18/we-sued-the-dol-and-the-dol-blinked/#respondWed, 18 Jul 2018 18:40:52 +0000https://www.laboremploymentreport.com/?p=2982Back in 2016, on behalf of the Worklaw®Network, a nationwide association of independent labor and employment law firms of which Shawe Rosenthal is a member, we filed suit against the U.S. Department of Labor to block the DOL’s new interpretation of the “persuader rule,” which is the advice exemption of the Labor Management Reporting and Disclosure Act (“LMRDA”). Several other suits were filed as well, a nationwide injunction was issued by a federal court in Texas, the DOL issued a proposed rule to rescind the new interpretation, and now, repeatedly citing the favorable decisions in our lawsuit and directly quoting the comments to the DOL’s proposed rule we submitted on behalf of Worklaw, the DOL has officially rescinded the rule.

As we explained in a previous blog post, the LMRDA requires reporting of certain information when an employer hires a consultant to persuade employees in the context of a union election or collective bargaining. The DOL under the Obama Administration sought to expand the scope of the reporting requirement so greatly that it would have swallowed a statutory exemption from reporting for advice offered to employers behind the scenes – an exemption intended to allow employers to engage in confidential communications with their attorneys. That exemption had been in place for over 50 years.

The Obama Administration’s approach was inconsistent with the statutory language of the LMRDA, as well as the U.S. Constitution. Shawe Rosenthal attorneys Mark Swerdlin, Eric Hemmendinger, and Parker Thoeni, along with our colleagues at Seaton, Peters & Revnew, P.A., led the charge on behalf of Worklaw to prevent the Obama Administration from enforcing its misinterpretation of the LMRDA. Parallel cases were also filed in Texas and Arkansas, and the Texas federal court issued a permanent nationwide injunction.

After President Trump took office, the DOL requested stays in the pending litigation, then announced last year that it would be issuing a Notice of Proposed Rulemaking (“NPRM”) to rescind the new rule. The NPRM also proposed considering a middle-ground between the long-standing rule and the Obama Administration’s misinterpretation of the LMRDA. We then provided comments to the DOL in support of the rescission, emphasizing that the DOL should rescind the rule and return to the prior interpretation rather than consider a middle-ground. And now, just as we requested in our comments to the DOL, the final rule is a return to what existed before.

In the DOL’s news release on the rescission, the Office of Policy’s Deputy Assistant Secretary Nathan Mehrens states, “For decades, the Department enforced an easy-to-understand regulation: Personal interactions with employees done by employers’ consultants triggered reporting obligations, but advice between a client and attorney did not…. By rescinding this Rule, the Department stands up for the rights of Americans to ask a question of their attorney without mandated disclosure to the government.”

As did we.

]]>https://www.laboremploymentreport.com/2018/07/18/we-sued-the-dol-and-the-dol-blinked/feed/0Don’t Access My Emails And Tell Me It’s Legalhttps://www.laboremploymentreport.com/2017/08/03/a/
https://www.laboremploymentreport.com/2017/08/03/a/#respondThu, 03 Aug 2017 15:10:48 +0000http://www.laboremploymentreport.com/?p=2608Departing employees do a lot of dumb things with email. Sometimes they use an employer’s systems, which they know are regularly monitored, to ask their attorneys how to set up claims against their employers. Sometimes, after they email a slew of confidential or trade secret information to themselves on their way out the door, they click delete on the sent messages only to leave all of the evidence in the “deleted” folder. In today’s blog, we ask employers to leave it to departing employees to do dumb stuff with email.

A good rule of thumb is generally to avoid rifling through a former employee’s personal email account without authorization. An employer confronted this rule of thumb head-on in a recent case in the Maryland federal district court. The case, Levin v. ImpactOffice, LLC, started with an allegation by ImpactOffice that a number of former employees breached the restrictive covenant provisions in their employment agreements. One of the former employees, Melissa Edwards, shot back with an allegation that ImpactOffice confiscated her personal mobile phone, then used the phone to access and view emails stored in her personal Gmail account in violation of the Stored Communications Act (“SCA”).

The SCA generally prohibits unauthorized access to communications in an electronic storage system. Although the technical aspects of the SCA are interesting to a few dorky lawyers like me, the practical implications for employers here are crucial:

If you plan to confiscate a mobile device, make sure it belongs to the Company before confiscating it.

Do not request access to personal accounts and applications on the mobile device without a compelling reason for doing so unless you have an order from a court permitting such access.

Follow typical e-discovery best practices and preserve potentially relevant evidence, i.e., create a forensic image of the mobile device upon a reasonable anticipation of litigation, and advise adverse parties of their preservation obligations.

Employers who feel compelled to view current or former employees’ personal email accounts are not without options. Employers can, and should, consider the circumstances under which they might have a legitimate need to view a current or former employee’s personal accounts. In Maryland, there is a law prohibiting an employer from requesting an employee’s personal account usernames and passwords except in limited circumstances. Those exceptions are for situations involving (a) discovery that an employee was using personal accounts for business purposes and (b) discovery that an employee downloaded without authorization proprietary information to a personal account. (Notably absent from the Maryland law is an exception for the investigation of a discrimination or harassment claim or a threat of violence.)

Employers should recognize that the Maryland law permits a request for the username and password in these limited circumstances, but not access without authorization from the employee. Presumably, if the employee provides the username and password, the employee will authorize access.

A couple of practice pointers:

Employers can fashion agreements and policies that prohibit employees from sending proprietary Company information to personal email accounts absent authorization in writing from a high level Company official (this blunts the common “my boss told me to do it so I could work from home” defense).

Employers can consider including a provision in employment agreements allowing for a limited forensic examination of an employee’s personal accounts and devices when the Company discovers evidence of misappropriation; just be sure to limit the scope of an examination to account for the privacy interests of the employee because the enforceability of such provisions is not entirely clear.

When it is readily apparent from an employee’s email traffic that the employee has used the employer’s systems to misappropriate confidential information or trade secrets, employers should not underestimate the power of a court to order a forensic examination as part of a request for expedited discovery or a preliminary order from a court requiring a forensic expert to preserve evidence potentially relevant to the employee’s misconduct. Employers that are reticent to rush into court can use precedent in this area as leverage to arrive at a private agreement with the employee for a forensic examination. Word to the wise, though: leave the forensic examination to the professionals rather than reviewing emails on your own. If you rifle through an employee’s email account on your own, you may unwittingly be modifying critical evidence. You might also get sued.

]]>https://www.laboremploymentreport.com/2017/08/03/a/feed/0We Sued the Department of Labor, and Now It Has Backtracked on the Persuader Rulehttps://www.laboremploymentreport.com/2017/06/14/we-sued-the-department-of-labor-and-now-it-has-backtracked-on-the-persuader-rule/
https://www.laboremploymentreport.com/2017/06/14/we-sued-the-department-of-labor-and-now-it-has-backtracked-on-the-persuader-rule/#respondWed, 14 Jun 2017 20:02:34 +0000http://www.laboremploymentreport.com/?p=2546

As we previously blogged, Shawe Rosenthal, on behalf of the Worklaw®Network, a nationwide association of independent labor and employment law firms of which we are a member, filed suit last year against the U.S. Department of Labor to block the DOL’s new interpretation of the advice exemption of the Labor Management Reporting and Disclosure Act (“LMRDA”), or the “persuader rule.” And now, on Monday, June 12, 2017, the DOL announced a Notice of Proposed Rulemaking (“NPRM”) that proposes to rescind that new persuader rule interpretation.

The LMRDA requires reporting of certain information when an employer hires a consultant to persuade employees in the context of a union election or collective bargaining. The Department of Labor under the Obama Administration sought to expand the scope of the reporting requirement so greatly that it would have swallowed a statutory exemption from reporting for advice offered to employers behind the scenes – an exemption intended to allow employers to engage in confidential communications with their attorneys. That exemption had been in place for over 50 years.

The Obama Administration’s approach was inconsistent with the statutory language of the LMRDA, as well as the U.S. Constitution. Shawe Rosenthal attorneys Mark Swerdlin, Eric Hemmendinger, and Parker Thoeni, along with our colleagues at Seaton, Peters & Revnew, P.A., led the charge on behalf of Worklaw to prevent the Obama Administration from enforcing its misinterpretation of the LMRDA. Parallel cases were also filed in Texas and Arkansas, and the Texas federal court issued a permanent nationwide injunction, which has preserved the status quo.

Following the election of President Trump, it quickly became apparent that the DOL was going to take a different approach. The Trump Administration sought stays in the currently pending cases to determine how it would treat the Obama Administration’s rule. Surprisingly, rather than concede in the pending litigation and allow the permanent injunction to stand, the DOL has now proposed to rescind the Obama Administration rule and reconsider its approach.

The DOL’s strategy is curious. If, as many believe, the Trump Administration simply disagreed with the Obama rule and sought to maintain the status quo, it could have simply stopped defending the rule in litigation. Alternatively, it could have issued a NPRM that proposed rescission without discussing a need for reconsideration and issuance of a rule that is more well-reasoned than the rule issued by the Obama Administration. One would expect that, if something akin to the Obama rule is still under consideration, it would make little sense to go through the rulemaking process to rescind a rule that is on the books but not enforceable in order to come up with a similar rule. It appears that the DOL may be considering some new rule between complete rescission and the position taken by the Obama Administration in 2016. Thus, it is possible that the current NPRM is a stopgap measure intended to improve the DOL’s litigation position in the pending cases.

It remains to be seen how this action will impact the currently pending litigation, but we certainly encourage employers to submit comments to the NPRM, within 60 days from its release on June 12, 2017, urging the DOL to go back to the prior rule. Comments may be submitted electronically here.

]]>https://www.laboremploymentreport.com/2017/06/14/we-sued-the-department-of-labor-and-now-it-has-backtracked-on-the-persuader-rule/feed/0Is Setting Pay Based on Prior Salary the Same as Setting Pay Based on Sex?https://www.laboremploymentreport.com/2017/05/11/1-31/
https://www.laboremploymentreport.com/2017/05/11/1-31/#respondThu, 11 May 2017 19:14:45 +0000http://www.laboremploymentreport.com/?p=2509Can prior salary justify a pay differential, or does it necessarily perpetuate sex-based pay discrimination? This was the subject of a recent Equal Pay Act (EPA) case before the U.S. Court of Appeals for the Ninth Circuit, in which the court bucked the recent trend of connecting prior salary with pay discrimination against females.

The EPA is a federal law that prohibits discrimination between employees on the basis of sex by paying employees of one sex less than employees of the opposite sex for equal work. It bears noting that the law applies to both sexes. Under the EPA, a Plaintiff must show that he or she is receiving different wages for “equal work.” If the Plaintiff makes that showing, the burden shifts to the employer to assert any of a number of affirmative defenses to explain the wage disparity, including:

A seniority system

A merit system

A system based on quantity or quality of production

A differential based on any other factor than sex (Common legitimate rationales under this factor, which is something of a catchall, include variables such as type of or years of experience, education, and certifications).

In Rizo v. Yovino, the court confronted the question of whether prior salary alone can constitute a legitimate “differential based on any other factor than sex.” Rizo worked for a public school system in California. When Rizo was hired, her salary was determined based on a schedule of twelve levels, each level consisting of ten progressive steps within the level. New employees were hired into level 1, and placed in the step that corresponded with the prior salary increased by 5%. Rizo’s prior salary, even increased by 5%, was lower than the lowest step in level 1, so she was hired at step 1 of level 1. Rizo subsequently discovered that she earned less than her male counterparts, one of whom was hired at step 9 of level 1.

Relying on prior Ninth Circuit cases, the court held that a pay differential based on prior salary alone qualifies as a factor other than sex if it effectuates some business policy and that the employer uses the factor reasonably in light of the employer’s stated purpose as well as its other practices. The employer provided four business reasons for its policy: (1) it is objective, (2) it encourages candidates to leave their current job to join the employer because of the guaranteed 5% increase, (c) it prevents favoritism and ensures consistency, and (4) it is a judicious use of taxpayer money (an argument unique to a government employer). The court accepted these business reasons. It further noted that the fact that an employer may have relied upon other factors as well to explain the wage differential is of no significance, “if…as is the allegation here, prior salary is the only factor that causes the current disparity.”

Although the court did not delve into this topic, it may be worth noting that Rizo was moving from Arizona to California. As all of us know, wages vary significantly in differing geographies. Thus, a difference in prior salary may very well be based on the geography of the prior employment rather than perpetuating sex-based pay discrimination.

Frankly, the Ninth Circuit’s decision was somewhat unexpected, given its reputation as being among the most liberal (i.e. employee-friendly) Circuits. Its decision lies diametrically opposed to the position of the Equal Employment Opportunity Commission (which is the federal agency that enforces the EPA) and other federal appellate courts, as well as a recent legislative trend banning the use of pay history.

The EEOC takes the position that prior salary alone cannot constitute a differential based on any other factor than sex. This position essentially assumes that all women have been subjected to unlawful pay discrimination by prior employers, which would render prior salary alone a sex-based consideration.

Some other federal Circuit Courts have agreed with the EEOC’s position. For example. the Tenth Circuit in Angove v. Williams-Sonoma, Inc., held that, “The EPA only precludes an employer from relying solely upon a prior salary to justify pay disparity.” In Irby v. Bittick, the Eleventh Circuit stated that, “Appellees cannot defend paying [Appellant’s male comparator] more than [Appellant] simply because of the pay schedule of Jones and Evans’s previous employer.” The same court also found, in Price v. Lockheed Space Operations Co., that “[t]he legislative history thus indicates that the ‘factor other than sex’ exception applies when the disparity results from unique characteristics of the same job; from an individual’s experience, training, or ability; or from special exigent circumstances connected with the business.”

Of particular note, this issue has become a hot topic in the legislative arena, with several jurisdictions banning the use of pay history to set pay. The stated rationale underlying these laws essentially adopts the EEOC’s position – that a historical gender wage gap exists, with women receiving a significantly lower rate of pay for similar work as men, and basing pay on prior pay history perpetuates that gender gap. Massachusetts, Philadelphia, and New York City have all passed laws preventing prospective employers from requesting or using pay history. The New York City law is set to go into effect in October 2017, and the Massachusetts law is set to take effect in 2018.

Notably, the implementation of the Philadelphia bill is delayed due to a lawsuit filed by the Chamber of Commerce for Greater Philadelphia. The Chamber asserts that the law violates:

employers’ First Amendment right of free speech to ask about and rely on pay history,

employers’ due process rights under the Fifth Amendment because it imposes severe penalties for violations of vague statutory prohibitions,

the Commerce Clause of the U.S. Constitution because it has extraterritorial effect that burdens interstate commerce, and

the Pennsylvania Constitution and Home Rule Act because it impacts those who neither work nor live in Philadelphia.

It will be interesting to see if any of these arguments find support from the court – if it does, that may embolden others to challenge similar legislation elsewhere. In the meantime, however, similar bills are being proposed in jurisdictions all over the country and we would expect this legislative trend to continue.

Back in March of this year, the Department of Labor (DOL) tried to interfere with employers’ confidential communications with their attorneys. Some law firms surrendered, ran, or hid, saying they would no longer have the kinds of conversations DOL wanted to interfere with. Shawe Rosenthal, along with other Worklaw Network firms, stood up and fought. We filed a lawsuit against the DOL to protect our clients’ interests and maintain the integrity of the attorney-client relationship. Two similar lawsuits were filed against the DOL, and in one of them, employers can consider themselves victorious following an Order from a United States District Court in Texas holding the DOL’s new rule unlawful and setting it aside.

The DOL rule at issue misinterprets a provision of the Labor Management Reporting and Disclosure Act (LMRDA). At a basic level, the LMRDA requires employers to submit reports to the DOL when they hire middlemen to persuade employees regarding their decision to unionize or bargain collectively. The LMRDA explicitly exempts any advice from reporting. Well, the DOL went and upended the LMRDA and 50 years of settled practice by deciding it would require all advice to be reported. Yep, you guessed it- that means the DOL thought it could keep tabs on your conversations with your lawyer about how you can legally respond when a union attempts to secretly infiltrate your workforce.

The November 16, 2016 Order holding the rule unlawful and setting it aside was the third in a string of victories for employers. Previously, the same Texas court issued a preliminary injunction temporarily preventing the DOL from enforcing the rule. The first in the string of victories came almost immediately after the DOL found itself on the receiving end of three lawsuits challenging the rule. The DOL unilaterally suspended its LM-21 reporting requirement, which would have required attorneys to divulge confidential information about all of their clients to the DOL.

The preliminary injunction previously issued by the Texas court is on appeal to the Fifth Circuit, and we should all watch that appeal closely because the current Order relies upon the same reasoning. We will also need to stay tuned to see how the change in Administration impacts the government’s litigation position.

]]>https://www.laboremploymentreport.com/2016/12/08/1-8/feed/0Bet You Didn’t Know that Your Interior Decorator is a Persuaderhttps://www.laboremploymentreport.com/2016/04/08/2051/
https://www.laboremploymentreport.com/2016/04/08/2051/#respondFri, 08 Apr 2016 21:10:20 +0000http://www.laboremploymentreport.com/?p=2051So, as I said in my last post, we have read this new persuader rule front to back and back to front. Last week, we told you why we are suing the government: the new interpretation is unfair and unlawful. This week, because the DOL went completely off the reservation, I thought we should poke a little fun at it for some of its ridiculous positions, so here goes.

DOL says it is interpreting the “advice” exemption, but it completely reconfigures the definition of persuasive activity. The statute refers to persuasive activity as activity with the direct or indirect object to persuade. Somehow, DOL tangled itself in knots over this one. It now thinks that direct persuasive activity means the persuader has direct contact with employees and indirect persuasive activity means you do not have direct contact with employees. Do you see anything about that in the statute? Neither do I. That’s because it’s not there. The terms “direct” and “indirect” modify the objective, and have nothing to do with contact with employees. Obviously, you need to have contact with employees to directly or indirectly persuade them regarding their rights.

DOL’s rule conflates a principle put in place by the former rule, that persuaders need only report direct contact with employees, with the language in the statute, that activity with the direct or indirect object to persuade must be reported. In so doing, the DOL’s position is that all advice, which is expressly exempted from the reporting requirement, is now considered indirect persuasive activity that must be reported.

Let’s see how this can play out. DOL actually admits that the new rule is so broad that it can cover an interior decorator (even if unlikely). Holy smokes! Consider the following quote from the Final Rule:

Similarly, in response to a hypothetical posed by one commenter, an employer who hires an interior decorator to improve the working conditions at its facilities would not trigger a reporting requirement, per se, merely because a possible effect of such workplace change could be the subtle influencing of employees concerning their right to organize. Rather, to trigger reporting the interior decorator, like any third party, must undertake its activities with that object in mind. That such a scenario would be reportable is highly unlikely. That an agreement between the parties would call for the design of a workplace –layout, furnishings, wall coverings, lighting, fixtures, and so forth — to create an anti-union ambience seems a remote prospect.

DOL says that the interior design would have to create an anti-union ambience (really, it should have said it has to create a persuasive ambience, but it just couldn’t help itself), but the rule is clear that if you provide advice regarding any policies or benefits to employees with the object to persuade the employees not to organize, DOL’s position is that the obligation to report is triggered. In other words, it is not whether the policy itself (or in this case the ambience of the interior design) is “anti-union” but whether the intent behind the implementation of the policy is to remain union free. The commenter rightly asked whether an employer that hires an interior decorator and says to make our shop nicer than the unionized shop down the street so employees do not organize has triggered the reporting obligation.

Here’s another illustration of how vague this all is. Say you hire a consultant to revise your handbook. She revises the entire handbook and you pay her for her services. When she gets the check, she says to you, “I did you a solid- your handbook is now so good for your employees, they will never unionize,” revealing that she did the work, under the DOL’s new interpretation, with the object to persuade employees not to organize. Is the reporting requirement triggered? Even though you had no idea and never asked the consultant to act with that intent? Yikes.

I could go on forever. My colleagues would sure agree that I’ve taken up enough of their time obsessing about the ludicrous nature of this rule. But if you share my outrage and want to commiserate, give me a call. I’m sure my colleagues would thank you.

]]>https://www.laboremploymentreport.com/2016/04/08/2051/feed/0Shawe Rosenthal and Worklaw Just Sued the DOLhttps://www.laboremploymentreport.com/2016/03/31/shawe-rosenthal-just-sued-the-dol/
https://www.laboremploymentreport.com/2016/03/31/shawe-rosenthal-just-sued-the-dol/#respondThu, 31 Mar 2016 20:50:11 +0000http://www.laboremploymentreport.com/?p=2044Although the government is often a thorn in the side of many of our clients, it is not every day that we decide to sue the government. Today was a different story.

On March 31, 2016, Shawe Rosenthal, on behalf of the Worklaw®Network, a nationwide association of independent labor and employment law firms of which we are a member, filed suit against the U.S. Department of Labor to block the Department’s new interpretation of the persuader rule. A copy of the complaint can be viewed here.

We discussed the new persuader rule in a previous post. To reiterate briefly, a federal law called the Labor-Management Reporting and Disclosure Act requires people who assist employers to fend off union organizing drives to file reports with the Department of Labor. The law contains an “advice exemption” under which employers and their attorneys do not have to report confidential information protected by the attorney-client relationship. For decades, the Department has correctly held that the “advice exemption” applies to lawyers who advise clients concerning union organizing drives, as long as the lawyers do not communicate directly with employees. Under the new interpretation, effective July 1, 2016, the Department has substantially narrowed the advice exemption. (Actually, the Department would say it substantially narrowed the exemption. I would say the Department completely eliminated it.)

The new interpretation is an election year favor to organized labor, which has been requesting this change since 2011. It is wrong for a number of reasons, but two concerns are paramount.

First, as the Department has historically and correctly recognized, the advice exemption was intended to be read broadly. The Department recognizes that it has eliminated the exemption of advice regarding persuader activities. Someone at the Department must have forgotten that its role is to interpret and enforce the law, not to try to change it.

Second, the new interpretation singles out a specific kind of message—advice concerning union organizing—for burdensome reporting requirements. That violates the First Amendment’s free speech clause, which protects us all from government regulation of speech based on the message. Simply put, the Obama Administration has no right to reward its political allies, i.e., unions, by imposing a burden on otherwise lawful speech, simply because the Department views it as “anti-union.” I’m sure unions would be up in arms if a Republican Administration tried to do to them what the Obama Administration is trying to do to employers. The fact that one side of a political argument likes what the government is doing to silence its opponents but would not want the same done to them is usually a good sign that the First Amendment has been violated.

There are a couple of important takeaways here. First, we are fighting for employers because the new interpretation is unlawful and unfair. It is unlawful and unfair to target employers because they want to convey a message that their businesses should remain efficient and union-free. The government is not allowed, and has never been allowed, to burden speech just because it dislikes the viewpoint of the speaker. It is also unlawful and unfair to attempt to require clients and their lawyers to report confidential information about their relationship to the government. In fact, lawyers have an ethical obligation to resist such unlawful government attempts. That is why Shawe Rosenthal and Worklaw are fighting the new interpretation and will continue to protect the confidential relationship we have with our clients.

Second, because the new interpretation represents a drastic departure from current law, it is important for employers to associate with sophisticated labor and employment lawyers who are intimately familiar with the new interpretation to help avoid noncompliance. When you sue the government for doing something that is unlawful and unfair, you need to study the government’s action front to back and back to front. We have done exactly that.